President’s Commission

to Strengthen Social Security

Tuesday,

July 24, 2001

Held at the

Capital Hilton Hotel

Washington, DC

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9537 Elvis Lane

Seabrook, Maryland 20706

301/577-5882
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PRESIDENT'S COMMISSION TO STRENGTHEN SOCIAL SECURITY 

Commission Members

Chairman, Richard D. Parsons

Co-Chairman, The Honorable Senator Daniel Patrick Moynihan

Samuel Beard

John Cogan, Ph.D.

William E. Frenzel

Estelle James, Ph.D.

Robert L. Johnson

Gwendolyn S. King

Olivia S. Mitchell, Ph.D.

Gerald L. Parsky

Timothy J. Penny

Robert C. Pozen

Mario Rodriguez

Thomas R. Saving, Ph.D.

Fidel A. Vargas

Commission Staff Members

Charles (Chuck) P. Blahous

Jeff Brown

Steve Goss

DFO, Social Security Administration

Mike Anzick
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I N D E X

Page

Welcome and Opening Statements 4

Finalizing Language in Interim Report 12

Motion 69

Creating Mechanism for Receiving Public Input

at September Public Hearings 70

Keynote: "---" indicates inaudible in transcript.
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M O R N I N G S E S S I O N

(10:14 a.m.)

Welcome and Opening Statements

MR. PARSONS: If we could take our seats. Good 

morning, ladies and gentlemen, fellow commission members, and 

members of the public. My name is Dick Parsons. I am one of the 

two co-chairs of this commission, the President's Commission to 

Strengthen Social Security. I am going to say that one more 

time, President's Commission to "Strengthen" Social Security . 

To my left is my distinguished co-chair, former Senator Daniel 

Patrick Moynihan, who is going to chair this morning's 

proceedings. Senator. 

CHAIRMAN MOYNIHAN: Thank you, Mr. Chairman. We agreed 

that we'd flip these not very onerous tasks back and forth as we 

move through the sequence of our commission. I'm going to take 

the liberty of -- well, let me just say, what we're here to do 

today is to go right down the table, starting with Bob Johnson 

and ending with Dick Parsons, going around, to take comments on 

the draft report to see what you feel about it and how you want 

it changed and see if we can agree to the changes. 

But first, I am going to take the liberty of putting us 

in a moment of perspective here about, as it were, the sequence 

of events in the 1990's that has brought this issue to the floor 

in the way it has. He's going to help me pass out something. 

Just pass these down, an article in The Washington Post on 
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June 29. That was since we last met. That describes a paper 

that only Estelle James and John Cogan and Saving down there 

could love, but it's a big 70-page document called "Family Policy 

and Social Security Policy During the 1990's." It was written 

for a conference that was held at the Kennedy School, Harvard 

University, on economic policy during the 1990's, and it's 

written by three distinguished economists: Douglas Elmendorf, now 

at the Federal Reserve; Jeffrey Liebman, who's at Harvard and at 

the National Bureau of Economic Research; and David Wilcox, who 

is also now at the Federal Reserve. Both he and Elmendorf had 

been in the Treasury, and Liebman had been Assistant to the 

President for Economic Policy in some mode in the White House. 

As we set about consideration of our first commission 

statement, it might be helpful, as I said, to take a moment to 

review similar efforts that took part -- that took place in the 

previous decade. For this I will rely on the paper, "Fiscal 

Policy and Social Security Policy During the 1990's." 

As I said, each of these three economists who had 

written the paper, and Marty Feldstein did a comment on it in 

that session, were serving in the White House or at the Treasury 

next door. The paper begins, much as it turns out our draft 

begins, and they were done without knowledge of one and the 

other. I quote on page two: 

"It has been clear for some time that 

the aging of the U.S. population will 
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eventually require sharp changes in 

Social Security revenues or benefits. 

The 1994-96 Advisory Council on Social 

Security presented three reform plans 

that placed important emphasis on 

additional prefunding and moved two 

other ideas to the center of the Social 

Security debate: individual retirement 

accounts and investment in equities." 

I might just say that again. That '94-96 Advisory 

Council "moved two other ideas to the center of the Social 

Security debate: individual retirement savings accounts and 

investment in equities." These are competing ideas, of course, 

but they all came up in that early part. 

The Advisory Council was, as the authors write, one of 

three "important commissions" to consider changes in Social 

Security during the decade of the 1990's. First came the 

Bipartisan Commission on Entitlement Reform that was co-chaired 

by Senators Bob Kerrey and Jack Danforth of Missouri. Next was 

the Quadrennial Advisory Council I mentioned, which was chaired 

by Edward Gramlich, and finally, the National Commission on 

Retirement Policy that was co-chaired by Senators Breaux and 

Gregg, and Jim Kolbe and Charles Stenholm Bill Frenzel will know 

from the House. 

None of these undertakings was trouble free. Some
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might say that they all failed. I would argue to the contrary, 

that they set the agenda we are now addressing. 

Kerrey and Danforth, as the authors note, set forth a 

comprehensive package, but, and again I quote, "Congressional 

leaders and Administration officials distanced themselves." 

Undeterred, Kerrey and his fellow commission member Alan Simpson 

went on to introduce legislation that among other things, again I 

quote, "gave workers the option of diverting two percentage 

points of their payroll tax payments to individual investment 

accounts." Thank you. 

The Gramlich Commission split three ways, and there was 

no majority report. However, the authors observe, again I quote:

"It is worth noting that despite the 

divisions on the commission, the 

majority of members supported some sort 

of individual accounts as part of Social 

Security; thus, the idea of individual 

accounts had in a few short years made a 

remarkable transition," and you won't 

mind this last clause, "from the white 

papers of libertarian think tanks to the 

mainstream policy debate." 

But the last of the three commissions, that of Senators 

Gregg, Breaux and their House colleagues, was sponsored by the 

Center for Strategic and International Studies. It, too, 
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recommended diverting two percentage points of the payroll tax to 

create individual accounts. In the last Congress, Senator Kerrey 

and I introduced such a measure as S.21, the First Members Bill 

in the Senate. We put large emphasis on corrections to the 

Consumer Price Index, which was a feature also of the GreggBreaux proposal. 

Now, all this was known. What was not known until this 

paper appeared was the extent to which these views made their way 

into the Administration itself. The Clinton Administration had 

at first kept its distance from this issue, but this was no 

longer feasible, given the facts being set forth by the 

commissions. The authors write, "Within the White House, serious 

consideration of tackling long-run entitlement issues began in 

the middle of 1997." A high-level team was assembled which met 

regularly in the summer and fall of 1997. 

Another possible issue, and White House staffs do this, 

there's a "we could go this way or we could go that way." I 

remember in the late days and months of the Kennedy 

Administration, there was the debate on whether the President 

should take up for his next election year issue, problems of the 

suburbs or problems of poverty. You could make a case in either 

direction, and LBJ came in and he picked poverty. The tax reform 

was such an issue. Instead, they moved to Social Security, which 

in contrast, and I quote:

"There was considerable enthusiasm among 
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the economic team for undertaking Social 

Security reform. This enterprise 

stemmed in part from the fact that the 

Gramlich Commission was seen to have set 

out a number of plausible paths to 

running long-run solutions and in part 

from the Rooseveltian legacy for the 

President that would come from putting 

Social Security on secure ground for the 

coming century."

The problem that had to be faced was that tax rates 

would have to, again I quote, "rise very significantly over time 

to fund current law benefits." The payroll tax would have to 

rise from the current 12.4 to "about 18 percent," which I think 

you --- an increase "roughly half," quoted there. 

In his January 1998 State of the Union Address, 

President Clinton called on Congress to "Save Social Security 

First," announcing that his budget would reserve all the 

projected surplus pending Social Security reform. All reform 

options other than an increase in the payroll tax should be on 

the table. 

In an op-ed article in The New York Times in March 

1999, the former chairman of the Council and Economic Advisors 

Martin Feldstein, who is the theorist perhaps primarily 

responsible for all this, commented that, again I quote: 
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"Individual accounts do not mean 'privatizing' Social Security. 

The government would set up the accounts, regulate the 

investments, and guarantee benefits," unquote. He sensed that 

there was a widening common ground on Social Security, which was 

the title of his page. 

One of the Clinton advisors, getting their options 

there, one of them clearly was individual accounts, and one of 

the problems was administrative costs. Peter Diamond had shown 

that the costs of the accounts in Chile and the United Kingdom 

were considerably high, and now again I quote the paper: "Deputy 

Secretary Summers insisted that the working group begin by 

determining whether it was even remotely feasible to set up such 

a system, what kind of service it could provide, and at what 

cost." 

From a political standpoint, it was considered 

important that the system be up and running before President 

Clinton left office in early 2001. 

We learn that the irrepressible Deputy Secretary at the 

time, later a Secretary, soon to be President of Harvard, 

Lawrence Summers, quote, "was fond of saying that he had to guard 

against the risk of setting up the Post Office when people were 

used to dealing with Federal Express." 

The account I've just sent around to you speaks of the 

mind-numbing details to which the staff workers went to figure 

out just how many key strokes would be required by the IRS to 
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enter all the individual accounts and so forth. 

As The Washington Post account, Mr. Glenn Kessleb 

noted, previous to the appearance of this paper, "the depth of 

the Administration's interest in private accounts was unknown." 

The response of Professor Liebman, in response to that article, 

has said, "but be clear that in no event would the Administration 

have diverted resources from the traditional Social Security 

system." Which is indeed our challenge. 

I will conclude by citing a letter of advice I have 

just received from Bob Kerrey. Bob I don't think reads many of 

the papers presented at the Kennedy School conferences, but he 

knows what goes on. I'll just let us off, set us off on this 

point. He said, "I have a great and abiding interest in the 

success of the 2001 Social Security Commission. I am willing to 

provide free advice, and I offer the following three suggestions. 

 One, start talking about the details of the most popular plan to 

fix Social Security. It is currently endorsed by all manor of 

folk. It is called the 'Do-Nothing Plan.' The Do-Nothing Plan 

discloses no details other than opposition to increasing FICA 

taxes. Citizens who want to know the rest of the details must 

look to the Social Security trustees who will tell them this: 

'The Do-Nothing Plan proposes to cut benefits 25 percent to 33 

percent.' And finally, wealth accounts should have a goal. No 

American who is willing to work all their lives should be poor 

when they become eligible for Social Security. Our goal is to 
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eliminate poverty amidst eligible Social Security beneficiaries. 

 By the way, the Do-Nothing Plan will increase poverty." 

With that discourse and the obvious reminder that as 

some of you will -- it will occur to some of you that I have 

returned to the classroom myself, but I just thought we should 

make it all about on the record. 

Now it is our plan, if we may, just to go right down 

the table to hear comments on the draft plan and any other 

subject that comes to any commissioner's mind in the course of 

going around the table. Bobby.

MR. JOHNSON: Thank you, Mr. Chairman. I will be very 

brief. I believe that the draft report clearly articulates the 

problem in very candid and fair language. It's an assessment of 

an issue that we all recognize to be vitally important to every 

American citizen, and I am particularly gratified that the report 

focused clearly on an issue that's of prime importance to myself 

and I believe to all African Americans, is the issue that 

confronts the disparity of ways that the Social Security system 

affects African Americans, because the disparity in mortality 

rates between African Americans and other Americans where African 

Americans die earlier, therefore receiving less in the form of 

Social Security payouts and less in the form of overall return 

from their work contribution to Social Security. I am convinced 

that one of the ways to address this is through the use of wealth 

generation private accounts that forms part of an estate 
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opportunity for African Americans.

Let me also say that I am, as a Democrat and a member 

of the Democratic side of the commission, somewhat disappointed 

that the response to what I think is a very carefully worded 

assessment of the problem and the response has been a hyperbole 

with a kill-the-messenger kind of approach. I was particularly 

disappointed in the response from Congressman Gephart in his 

comments about this commission, where he states in a press 

release that the commission, I'm quoting here, "is rigged with 

members who want to destroy Social Security." 

I think that if this commission is faced with this kind 

of rhetoric where the integrity of each commission member is 

called into question and the public is forced to choose sides in 

a partisan way, we will never get this important policy debate on 

the table in a reasoned way. As I said, as a member of the 

Democratic party and as a Democratic appointee to this committee, 

I would urge my fellow Democrats to lower the rhetoric, stop the 

kill-the-messenger strategy, and focus on trying to address a 

very serious problem that will not go away simply by calling out 

names or trying to hide in the sand. 

I hope the public will understand that all of us here 

and I think most Americans are dedicated to trying to solve a 

problem that will ensure that the benefits of the Social Security 

program that have worked for a long time will continue to be 

available to not only retirees but young people who are 
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contributing to the Social Security system. Thank you. 

CHAIRMAN MOYNIHAN: You have trouble making up your 

mind, I see. John.

DR. COGAN: Mr. Chairman, thank you. I do find it 

quite striking, the difference between what was going on in the 

Clinton Administration that you just described working towards a 

solution and the rhetoric that Robert just described coming from 

some members of Congress. 

My general comments on the report, I thought it was a 

very good report, very thoughtful, very well written. I have a 

lot of detailed comments that I will transmit to the staff in the 

next couple of days, and I'd like to take this opportunity to 

underscore a couple of points that I think are particularly 

important in the report and to make some suggestions. 

The first point that I want to underscore is the point 

that the staff made in the report about the financial problem 

facing the system. The way they described the problem I think is 

indeed quite accurate, as I understand it. All of the numbers 

that were used were numbers that came from the Trustees' Report. 

 They are not this commission's own numbers; they are the 

official numbers of the Social Security Administration. And 

according to these numbers, the problem is not in the distant 

future. The problem occurs quite soon. The first of the baby 

boomers begins to collect benefits just 7 years from now. The 

second point that they make is that the problem is large. Within 
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25 years, if one wished to finance all of the benefits that have 

been promised to retirees, one would have to raise payroll taxes 

by more than 30 percent. The problem is permanent. Many people 

think of this problem as one that's associated exclusively with 

the baby boom generation, and yet what the report makes very 

clear is that we have not a problem that's a pig in a python 

moving through. It's a permanent problem and requires a 

permanent fix. 

I do have a suggestion regarding this section. It 

seems to me that the commission could do a better job in helping

people understand how soon the problem is upon us. I know I'm 

just getting used to the idea that I'm living in the 21st 

century, and so 2016 still seems to me to be a long way off. And 

then I think, my Lord, if someone is age 50 now, when they reach 

age 65 that's just when the Social Security system begins having 

financial problems, and you might want to explore a little bit 

the circumstances that will confront a person who's age 50 today. 

When that person becomes 65, as I've said, the Social 

Security system will begin facing a financial problem. Five 

years later the government will have to raise payroll taxes by 

about 14 percent in order to finance the benefits that are 

promised to this individual. When the individual reaches age 75, 

the Federal government will have to raise payroll taxes by 34 

percent just to cover the benefits that have been promised to 

this individual. It is very unclear whether the government will 
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be able to impose such high taxes on future workers in order to 

pay the promised benefits to individuals. So to say the least, 

this example shows that the benefits to such an individual are 

indeed at risk. 

When this person retires at 65, the benefits that 

Social Security will pay to the individual are actually quite 

small. This individual faces very little prospect of receiving 

back in Social Security benefits what he or she put into the 

system, what he or she's employer put into the system, plus a 

reasonable rate of interest. 

By using these examples -- take a person who's age 40 

now. When that person reaches age 55, the system will begin to 

face financial trouble. Higher taxes will be imposed on that 

individual starting at age 55 through the rest of the 

individual's working life. By the time this individual reaches 

age 65, the added tax burden could be as high as 20 to 30 percent 

just to finance the additional benefits that have been promised 

to retirees at that point. This individual also faces little 

hope of receiving back in returns of what they paid into the 

system plus a reasonable rate of interest. 

I also think that the commission did a wonderful job in 

explaining some of the distributional aspects of the program that 

kind of lie below the surface. One of the goals of Social 

Security throughout its history has been to be basically a fair 

system, and this traditional goal has meant basically that 
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contributions have to be related to benefit payments. The 

greater a person's contributions, the greater will be the 

benefits that a person receives, but only up to a point. I think 

many readers will be surprised that this basic concept does not 

apply to a large segment of Social Security participants. Many 

African Americans pay more into the system in contributions and 

get less in return, simply because they have a lower life 

expectancy. Many young people will pay more into the system and 

get less in return than older individuals, just because they 

happen to be born later. Two-earner couples end up contributing 

more to the system and getting back less from the system than 

one-earner couples. So the system has a lot of redistributional 

components that kind of lie below the surface. 

One has to ask oneself, how can such a system with such 

redistributional anomalies persist for such a long time? I think 

the answer is, the system is so complex that very, very few 

people realized that these anomalies occur, and it suggests that 

when we consider solutions to the system that we correct some of 

these basic fairness problems that the system has. 

Finally, it does seem to me that at the close of the 

report it would be helpful to point out to the public that right 

now we have a window of opportunity to improve this system. The 

dimensions of the problem are in the future, and they are very 

clear to us. The window has been open by the budget surpluses 

that we now have. We can use these surpluses to solve Social 
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Security's financial problem. This window of opportunity is 

going to close as the surpluses diminish with the rising number 

of retirees in the baby boom generation, but if we can shore up 

the system, we can give individuals much more confidence in the 

Social Security program. We can do this by giving them 

ownership, greater value, and greater security in their benefits. 

 So I would recommend that when you think about a closing chapter 

of this report that you end on this note of optimism. I do 

believe that we have this unique window, and I think this 

commission will use the window to solve the problem. Thank you, 

Mr. Chairman. 

CHAIRMAN MOYNIHAN: Well said, and good counsel. I 

think Mr. Blahous -- I see him taking notes. 

MR. BLAHOUS: Indeed. 

CHAIRMAN MOYNIHAN: You might also be pleased, sir, 

that while you were speaking, Steve Goss was nodding. 

DR. COGAN: Nodding off? 

(Laughter)

SENATOR MOYNIHAN: Noncommittally. Sam Beard.

MR. BEARD: I want to commend the current report. I 

think it really sets out in very clear language the problems. 

That's what the interim report was supposed to do. I think some 

of the highlights are -- I've been interested in sort of the 

response and the counterarguments. I think, Senator, in terms of 

people who are against what we are potentially talking about 
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here, you'd be surprised to know that you want to dismantle 

Social Security, that you've always been against it, and that you 

want to throw it in the wastebasket. That might come as sort of 

a surprise bulletin to you. There is no individual in the 

country who has been a greater, stronger fighter for Social 

Security and its benefits that yourself, and I think it's sort of 

interesting to characterize Senator Moynihan as wanting to debunk 

and destroy Social Security. It's a fast-breaking news bulletin. 

Underlying what's going on, which people can't escape, 

is the demographics are changing. When I go across the country 

grassroots, as very well pointed out in the report, if you only 

have two workers left to finance one senior and the Crisis Center 

in Atlanta says that one-third of all women born today can expect 

to live over 100, the tax burden of those workers is going to be 

pretty extraordinary. The debate is who wants to save or destroy 

Social Security. We all want to save it. 

Now if you go down the litany, I hear this all the 

time, don't give up a guarantee for a gamble, when referring to 

the fundamental count. I haven't seen anything in the report 

which talks about giving up the guarantee. I don't think there's 

one serious plan before the Congress or the Senate or anybody's 

mind that gives up the guarantee. In my mind, the good plans 

raise the guarantee for low income, because low-income people 

largely have no pension and no savings. So here's a chance to 

not only cut people into equity rights but to raise the 
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guarantee. There is not one proposal that removes the guarantee.

Then the argument is this is a national and it's a 

social umbrella and it's not just a retirement plan. That refers 

to the disability insurance, the six million Americans on 

disability, and the survivors' benefits. There is not one plan 

that takes disability or social insurance off the table anywhere 

in the country that I know of. So these are false arguments. 

Now the question is, do we have individual accounts or 

don't we? I was very pleased in the report in the defining of 

that. Now, Steve Goss, who is a giant in his own time with the 

Social Security trustees and is always a source of everybody's 

facts and figures, and you could update this, Steve, if it's 

slightly wrong, but the last time I called you, about 18 months 

ago, 53 percent of all workers reporting to Social Security were 

earning $18,000 or less. Now, if I'm earning $18,000 or less, at 

$18,000 I'm paying $2,200 a year to Social Security, half by the 

employer, half by the employee. I don't have extra savings. 

It's not possible. On Friday I can't pay my bills. Now, if I'm 

setting aside $2,200 a year, I'm a huge saver. 

On a nonpartisan basis we were working hand-and-glove 

with the Clinton White House. Now we're working hand-and-glove 

with the Bush White House. The issue going forward in the 21st 

century is equity rights. How are we going to reasonably open up 

meaningful savings for all Americans? You can't go to the 

$18,000 worker and say, I have a great plan for you, I'm going to 
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increase your taxes 50 percent, from 12 percent to 18 percent, to 

bail out a system that's currently failing. It's nobody's fault. 

 It's because of the demographics. And then I'm going to add an 

extra $100 billion on top, which is another 3 to 4 percent of 

payroll, because I want you to have meaningful savings. That is 

the plan of the opponents. They don't articulate it that way. 

Fundamentally, let's raise our taxes to 18 percent just for 

Social Security, keep it the way it is, and put another 3 to 4 

percent on top because we want to have everybody to be a saver. 

It's a nonstarter from the beginning. 

So I'm excited that the report defines the need for 

savings, the need for the individual accounts. That's a problem 

which needs addressing. Estelle James is here, and it's very 

interesting, all around the world the demographics are changing, 

right now 30 on its way to 40 and then 50 countries which are 

changing their Social Security systems. They have to. And I 

think it's ironic that the United States being the leader of 

equities in the world might be the last. It's an ironic puzzle 

that communist China might set up an equity private sector system 

faster than the United States. There's something wrong with that 

concept. 

Last comment. When I first started working on this in 

1994, Senator, I went to your staff and they said, fundamentally 

there's going to be an issue of the old-way-of-looking things 

versus the new-way-of-looking things. It has nothing to do with 
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Democrats versus Republicans. So, it's going to be some 

Democrats and some Republicans who say let's go forward into the 

21st century, and it's going to be some Democrats and some 

Republicans who say no, this is too scary, do nothing, leave me 

out of it, I don't want to do it, or I happen to like 1935 as a 

good year. We've got to keep Social Security just the way it was 

set up. That's a nonstarter. 

As I go grassroots, it's very interesting. A lot of 

the leadership of groups like the African American community, 

some of the senior groups, are hesitant about this. Grassroots, 

labor union members say, I want a personal account. Members of 

seniors systems say, I want accounts for my grandchildren. So 

fundamentally, people know where this needs to go. I like the 

report, and I'm happy to be here. 

CHAIRMAN MOYNIHAN: Well, that's a pretty valid 

statement. I think it takes occasion, I was just going to say 

that I don't suppose there's any of us here who has not called 

Steve Goss for some counsel, advice. He's been wonderful. You 

are wonderful, sir. That BACA (sic) comes in much more detail 

than you can handle. You raised your hand.

MR. GOSS: Senator Moynihan. Yes, if I could just add 

to what Sam suggested. That value was of about a year and a half 

ago, and it represents essentially sort of a median or about the 

midway point in the distribution of earners. That number would 

probably be closer to about $20,000 for workers today, just by 
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way of clarification. Everybody of course is aware, in this 

group I know, that the median or the sort of 50th percentile 

tends to be lower than the average earnings level, which is 

many -- several thousands of dollars higher than that level. It 

would be closer to $30,000 actually. 

CHAIRMAN MOYNIHAN: The median is that point where half 

the population is below --

MR. GOSS: The median --

CHAIRMAN MOYNIHAN: -- and half the population is 

above.

MR. GOSS: Exactly. Half of the workers earning 

below --

CHAIRMAN MOYNIHAN: Yes.

MR. GOSS: -- half the workers earning above. 

CHAIRMAN MOYNIHAN: Gerald Parsky. 

MR. PARSKY: Thank you, chairmen, co-chairmen. I, too, 

want to join in complimenting the staff for the report. I think 

it is an excellent report, and I think it accurately lays out the 

problem, which was the objective at this point in time. In 

particular, I thought it was useful, and really I think for one 

of the first times I've seen, to lay out the magnitude of the 

problem in terms of financial assets that would be necessary in 

order to satisfy the benefits in the future. The part of the 

report that differentiates between bookkeeping assets and 

financial assets that are necessary and compares the Social 
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Security program as it currently exists to what a private pension 

plan would like I thought was quite interesting. I hadn't seen 

that outlined before, so I did comment to the staff about it. 

Just my general thoughts really are three or four. 

First, I think what we're really talking about at the heart of 

this effort is trying to provide our citizens, and in 

particularly lower income people, with a stake in their own 

retirement which they don't have now. There are a lot of 

different ways in which you can provide that stake, but I think 

that it's important that people can feel comfortably that they do 

have a stake in their own retirement. 

As we look at things going forward, I think it's 

important that we not allow scare tactics or fear to interfere 

with coming up with real solutions. I cite a couple. Recently 

I've read that a number of people have pointed to the fact that 

for the first time in history the 401K plan assets declined, and 

some would use this as to alert or scare people about the 

relative safety of investing in equity or investing in securities 

generally. I would urge that as we move forward that we place 

that kind of statistic in a historical perspective. If you look 

at the period 1990 to 2000, or any 10-year period, but if you 

just look at 1990 to 2000, the average return on investment for 

the 401K funds was about 11 to 12 percent. 

MR. : Really?

MR. PARSKY: And if you look historically at most 10-
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year periods for equity returns, they would approximate 9 to 11 

percent returns. That's not to say that we would come up with a 

suggestion that only equity can be invested in or that the nature 

of the programs that we may suggest might be more narrow, but I 

think it's very important that we not be derailed from looking at 

it because of one relatively minor blip, if you will, in the 

market place. 

Second, what I would call area of kind of current 

hyperbole has to do with the current budget and how the budget 

surplus may be used or not used in connection with this effort on 

Social Security. I think it's important to emphasize and 

continue to reemphasize that the surplus that has been created 

relating to the Social Security will be dedicated in one form or 

another to preserving the benefits of Social Security, and if the 

Congress in its wisdom decides that they want to spend more than 

they should, that's outside of the Social Security surplus. I 

think it's not really a choice, at least in my understanding it's 

not a choice, of spending the Social Security surplus on other 

things; it's really a choice of whether the Congress in its 

wisdom wants to finance additional spending outside of the Social 

Security surplus. 

A final point I would make relates to timing. I would 

reiterate what Sam and John has said I think in terms of timing, 

and that is, it's extremely important that action be taken now 

when there is an opportunity to take action, and I would cite in 
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that connection kind of three things that ought to motivate us 

now to take action. One, there are more choices available now 

than may be available in the future. Two, changes or any changes 

that we talk about can be phased in on an easier basis now as 

opposed to the future. Three, and perhaps the most important, is 

I think that with a lot of the hyperbole there is a danger that 

confidence in the Social Security system may be eroded, and by 

acting now I think we can help preserve or build confidence both 

with respect to the ability to pay benefits as they come due and 

that the system itself will be strengthened. Thank you. 

CHAIRMAN MOYNIHAN: Thank you, sir. I think we ought 

to try to get from a little collection of the polls that were 

taken in the '80s, early '90s. Clearly a majority of nonretired 

adults did not think they would get Social Security, and let's 

get that together. We've had that problem. We may have it and 

it may get worse. Another of our distinguished economists, 

Olivia. 

DR. MITCHELL: Thank you. Apropos to your point, there 

was actually a collection of data that was put together from the 

Health and Retirement Study, which I furnished to Chuck and some 

other folks on your staff, on changes in the expectation that 

older Americans --

CHAIRMAN MOYNIHAN: This has been done. Well, good.

DR. MITCHELL: -- have about Social Security. In fact, 

it appears that fewer older Americans are quite confident about 
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their expectations of getting Social Security. So we can bring 

that to the commission as a whole. Be happy to do that. 

So thank you very much for providing me the opportunity 

to make some remarks about our interim report. I'm very pleased 

to participate in the second meeting of our commission. I take 

it as a very great honor to serve the nation on this panel in a 

responsibility that I know all of us, Democrats and Republicans 

alike, also take quite seriously. 

I believe that our commission's goals are to educate 

our fellow Americans about what our system's financial troubles 

are and to design a plan that can restore credibility to 

America's retirement security program. In the draft interim 

report, which I support, we take up the first task, that is to 

lay out what the problem with the program is and to identify 

which direction is up in terms of evaluation criteria. We have 

not yet begun our second task, which is what lies before us next. 

In my remarks today there are two comments that I'd 

like to offer on our report, to ourselves as a group as well as 

to the public who might read it, and I very much would like to 

encourage the public to read it and offer us comments. 

The first comment is that the U.S. Social Security 

system is not in danger of running out of money today. Our 

report does not say that it is bankrupt today. No one will get 

benefit cuts today. This is not what the interim report says. I 

think that's very important to identify and to emphasize, because 
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many of the objections that we've been hearing really run 

roughshod over that point. 

It is true that our OASI system faces important 

financial shortfalls that advance action can do a great deal to 

alleviate. As the report states and other folks here have 

mentioned today, in about 15 years the annual Social Security 

system revenues will be inadequate to pay currently promised 

benefits. Everyone in this room and everyone else listening 

today should immediately do the mental math that John Cogan 

proposed. Add 15 years to your age to figure out what you will 

be doing when the two curves cross. I'm sure that we'll all 

agree that it's better to try to fix the system now than when 

we're 15 years older and have that many fewer degrees of freedom. 

And also as has been pointed out, this is not a oneshot problem. This is not a one-time issue that we have to fix. 

 The problem is permanent, it's ongoing, and it just keeps 

getting worse every time another year transpires. 

The Social Security system does of course have a claim 

on Federal government IOUs to pay the money from it, also known 

as Trust Fund assets. But as our report lays out, redeeming 

these IOUs requires financing from somewhere. As we know, when 

the government gets financing from, quote, unquote, "somewhere," 

this means workers. Typically, either new tax revenue will have 

to be devoted to the program, or benefits will have to be cut, or 

some other government spending will have to be reduced. Past 
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experience, in my judgment, shows that giving the surplus to the 

government typically results in increased government spending on 

other programs. I believe that giving control to workers will 

result in less political risk that the government will spend 

Trust Fund assets as has happened in the past. Reforming the 

system now to make benefit promises sustainable in the future is 

necessary to increase both worker and retiree economic security 

in the future. 

My second point is that many people would be better off 

under a reformed Social Security system with a personal saving 

feature. Some researchers claim that today's Social Security 

system is progressive because the benefit formula provides a 

higher percentage return to lower wage earners than high earners. 

 There's no question about it. The benefit formula is 

progressive under the current system, but there are a couple of 

issues that need discussion that the report speaks to. One is 

that many of these studies that I've made allusion to focus only 

on benefits while ignoring taxes. Obviously, this is an 

incomplete perspective and not the way most tax payers see the 

system. About a third of older married women today can expect no 

extra Social Security benefits if they work. Further, research 

shows that future increases in women's labor market attachment 

will not improve many women's benefits, despite the fact that 

they will be paying payroll taxes into the system each year. We 

also note in the report that divorce rates typically peak around 
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7 years after marriage, yet the benefit structure under Social 

Security today is such that former wives cannot get access to the 

benefits unless they manage to remain married 10 years under 

current rules. What this means is that many women will not, 

under current rules, benefit from paying into the system. 

Also, the current system does nothing to ensure that 

older women are protected from poverty, since there is no minimum 

poverty guarantee in the OASI system. In fact, for many women 

the net benefit from Social Security due to additional 

contributions is and will remain negative for the foreseeable 

future. I believe we can and should do better, and ownership of 

a personal account under Social Security can play a critical role 

in this improvement. 

The current system also requires people to pay in taxes 

over a lifetime, but as the report points out, it does not 

represent an asset that can be passed on if people die young. As 

Bob Johnson noted, many people today don't expect any return from 

the system. For example, a typical 22-year-old man today has a 1 

in 5 chance of dying before normal retirement age, so we would 

get no old age benefit even after a lifetime of contribution. 

And some people are even more vulnerable. For example, African 

American men have a 1 in 3 chance of dying young. If they have 

less than a high school education, their chances of dying young 

rise to 2 out of 5, or 41 percent. An individual account program 

would permit some of these people to leave some of their 
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contributions and interest as a bequest to their heirs after they 

pass away. 

I understand that the Office of the Actuary is doing 

some new analysis on patterns of redistribution under Social 

Security by race and sex, and I would like to urge that this 

report be provided to the commission to inform our further 

deliberations. 

In closing, as an educator I commend the staff for its 

diligence, its honesty, and its hard work in helping educate the 

American public on Social Security issues. I look forward to our 

continued work and discussion. I and many fellow Democrats 

believe that increasing taxes while keeping the current troubled 

system in place is the wrong way to go. I and many fellow 

Democrats believe that personal accounts are a way to structure 

real increases in saving while reducing political risk. They are 

a way to enable people to diversify their investments and a way 

to increase individual rather than government ownership of the 

nation's resources. Thank you. 

CHAIRMAN MOYNIHAN: Well, we can see how fortunate 

those students in Pennsylvania are. Let's hear from the Texas 

A&M right now and I think a somewhat different political 

perspective. 

DR. SAVING: Thank you, Mr. Chairman. Although the 

economics of this are straight forward, so I think if you look at 

the economists as a group as a party rather than political 
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parties, I think you'll discover that we're much more similar 

than the political parties appear to be. 

I think the people who wrote the report, the staff, are 

to be commended on doing the one thing the report was supposed to 

do, and that was to outline what the options are. And the 

options are real. We can't, by simply saying that everything is 

fine, change the fact that there are real things that are going 

to happen, and combined with other entitlement programs, and the 

report makes this also clear, that by 2060 the entitlement 

programs that we have are going to totally exhaust the federal 

budget if it remains at 20 percent of gross domestic product. 

Since that cannot happen, future Congresses are going to have to 

face whether or not they are going to continue any current 

programs that they're supplying to workers or continue the 

programs that they're supplying to retirees. That's going to be 

a very hard choice, but it's a choice that has to be made and 

it's pointed out in the program. 

It lays out no amount of rhetoric will change the fact 

that when the baby boomers retire, they are going to consume real 

food, drive real cars, live in real apartments, and consume real 

health care. All we have to work with is the output of the 

nation. We don't have anything else. Government cannot supply 

anything; it doesn't produce anything. It only takes from the 

people who do produce and gives it to other people. In this 

case, we're talking about it gives it to old people, like me or 
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Pat, and takes it from the young people. That's all we can do. 

We can't do anything more than that. To argue that the Trust 

Fund is safe because it's based on, I quote here, "the ironclad 

commitment of the U.S. government to honor its debt obligations." 

 Now, the U.S. government doesn't have any assets. The assets 

are all you people who are sitting out here and the fact that you 

produce output, because that's what old people are going to 

consume. Those are the assets, and when we start to cash in the 

so-called Trust Fund, it means we're going to come to you and say 

we're going to give old people more, you're going to have to 

consume less. There isn't any other way to do that. 

I have one issue I think the Trust Fund -- I mean our 

interim report should make clear, and that is that borrowing and 

taxing to solve this problem in the future have exactly the same 

implications for the amount that workers are going to get to 

consume. It doesn't make any difference when old people consume 

more out of the pie that we have whether we decide to get the 

more from workers by giving them a bond that says in the future 

some future worker is going to give up a lot of income in 

consumption to pay you back or whether we tax you. It means you 

still get to consume less. Workers will have to consume less in 

the future, and there isn't any other way out of this, unless we 

try to increase the size of the pie, and that's what a program 

that attempts to make real investment does. It tries to make 

future income bigger so that future workers when they give up 
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consumption will have some more left for themselves. 

Again, I commend the people who put the report together 

in taking our views and stating very clearly what the options 

are, and I think everyone has to say this is not about politics. 

 It's about the economics of this, and we can't change the budget 

constraint. We can't change our output, unless we invest more. 

Thank you. 

CHAIRMAN MOYNIHAN: Thank you, sir. Tom, do you think 

it would be a useful idea that in the final report that does come 

that you and I have a statement saying we've already got ours, so 

we really are disinterested?

(Laughter)

CHAIRMAN MOYNIHAN: Now to our distinguished once and 

future academic Mr. Pozen.

MR. POZEN: Thank you, Senator Moynihan. I want to 

make four main points here. The first point deals with, and the 

second point both, the debate that I'm reading in the press about 

the 2038 date and the 2016 date. I guess one nice thing is that 

there seems to be an agreement that at least in 2038, even among 

the critics, there is a very serious problem in 2038, and that 

the system is technical insolvent in 2038, and there would be a 

need to either cut benefits or raise payroll taxes by 25 to 30 

percent if we do nothing. 

Now, for people who take solace in the fact that they 

think that 2016 is not the right date and 2038 is the right date, 
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I'd only want to point out to them that if you're going to solve 

a problem of that magnitude in 2038, we better start right away, 

because this is a long-term problem and the only effective 

solution is a long-term solution. So I myself would not take a 

lot of comfort in the fact that you have this big a problem but 

it's in 2038. 

The other thing that's related to this, I hear a lot of 

people in private conversations and public saying why can't we 

just grow out of the problem. I think the report does a very 

good job in addressing that issue. It is, of course, a 

reasonable thing for people to say gee, given the tough decisions 

here, why can't we just grow out of the problem. And we have 

been blessed over the last 5 years or so with a very significant 

increase in productivity. It is unclear to me whether we will 

repeat that increase in productivity over the next 10 or 20 

years, but the report makes clear that even if we do, then wages 

will increase. If productivity increases, wages will increase, 

and benefit obligations will go up. So arithmetically it's not 

possible to grow out of this problem. You might alter the 2038 

date to 2040 or 2046, but we're talking calibration, and it is 

just simply not possible to grow out of the problem by having 

more growth. 

The second point I want to make relates to the year 

2016. Here I think it is very unfortunate that some people have 

been saying that well, the commission is taking the position that 
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we're just trying to scare people because all benefits will be 

cut in 2016. In fact, the report doesn't say that. There's no 

one on the commission who is saying that. A much more I think 

thoughtful and subtle point is being made: that in 2016 when the 

Trust Fund has to start redeeming these Treasury bonds, then the 

Treasury will have to find resources to redeem them with, and 

that there will be a very serious competition or trade-off 

between the redemption of these bonds and other very legitimate 

programs, such as education, defense, et cetera. 

Now, I think that's a very important point, and that's 

the point the commission report is trying to make: that in 2016 

we will face a real resource trade-off in which real decisions 

will have to be made in Congress about how are we going to deal 

with these bonds that are being redeemed. Are we going to cut 

other programs? Are we going to issue more debt? These are the 

sorts of questions. 

Now, one of the things I've been struggling with is 

some people say well, these are very good bonds. They're 

Treasury bonds. Why should we worry? I would agree that these 

are very high credit bonds, and I think one useful way to think 

about this is, suppose a subsidiary of a company held the bonds 

of a parent that was a triple A credit. Yes, the subsidiary 

could get those bonds paid back by the parent, but then the total 

value of the corporate entity wouldn't change at all. And here 

in a sense we have the same sort of circularity issue. We have 
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very good bonds, but they're held by one arm of the government 

and they are going to be redeemed by the other. So the 

government as a whole is pretty much in the same situation, the 

redemption of the bonds doesn't really contribute to the wellbeing of the whole operation, and we still face those real 

resource issues. 

The third point I want to make is relating to lower 

income, lower wage workers and minorities. I think Olivia has 

done an excellent job talking about women, and Bob Johnson did an 

excellent job on African Americans. I think I personally was 

educated by the report, because I assumed that since the 

percentage of career earnings that went to lower income people 

was higher than higher income people that they were doing better, 

but once these mortality issues are taken into account, then 

obviously there isn't a progressivity in the system. Now again, 

I've been reading things that people say, oh no, it really is a 

little progressive, but I think if you look at all the studies 

together, at most you can say, well, maybe it's about equal for 

low income people and high income people if you take all this in 

account. 

But in my view, that's not good enough. I believe that 

the system should be progressive, and I get to Sam Beard's point, 

is the people who say that if we change the system, if we have 

individual accounts, that these will be bad for minorities or bad 

for women or bad for lower wage income. These people must be 
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making some sort of assumption about the design of the system 

that I don't know, because I think that the system can easily be 

designed to make Social Security more progressive, and I 

personally would support that. As Sam points out, this system 

can be designed for lower wage people to make the guarantees 

better. We don't have to have the same guarantee for all groups 

of people, and we don't have to have the same system for all 

groups of people. So I personally think that we can make the new 

system really progressive, as opposed to the existing system 

which at best is the same for lower income and higher income 

people. 

The last point I want to make, the fourth point, is on 

the PR battle. I feel like how the question is defined, how the 

problem is defined, is critical. If you believe that there is a 

lockbox with lots of money sitting in it, then obviously you 

think that there isn't much of a problem to be dealt with. I am 

concerned that we as commission members have not spoken out 

enough with the press. We of course are waiting for this report, 

are all trying to give our comments constructively, but that 

meanwhile people are taking shots at us all around, and I feel 

like there are a lot of very thoughtful points made here, there's 

been a lot of mischaracterization of our positions in our press, 

and I believe that it's important that we get out and address 

these issues. I think that if we let the critics get away with 

what I view as cheap shots as sort of saying well, we don't like 
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any change without any proposals, that Senator Bob Kerrey, former 

Senator Bob Kerrey is right, this is the Do-Nothing Plan, and we 

have to convince the public that the Do-Nothing Plan, if you are 

just against all change, this is the Do-Nothing Plan. And the 

Do-Nothing Plan cuts benefits or raises payroll taxes by 25 to 30 

percent, and that's -- we have to make sure that the people who 

are against all change bear the burden of the Do-Nothing Plan 

from a PR perspective. Thank you. 

CHAIRMAN MOYNIHAN: We thank you, sir. Coming from 

yourself, that's a very powerful statement. We are going to talk 

about the latter subject as we get around, and we do go around. 

Mr. Mayor. You've had some problems with borrowing and spending 

I believe in your time.

MR. VARGAS: Thank you, Senator. Actually, you 

reminded me that I've actually been at this since 1994 as one of 

the -- as I think the only member that was on the previous 

Advisory Council.

CHAIRMAN MOYNIHAN: That's right. 

MR. VARGAS: To Olivia's point, I personally have seen 

our options diminish, because we did have an opportunity then 

when we presented our recommendations and saw what we see today 

only now with fewer options, and as time goes on that will 

continue. So, urge again that the time is now to do something, 

not to do nothing, but to do something. 

First, I wanted to thank the staff for incorporating I 
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think the spirit of what all of us on this commission -- that's 

difficult to do, were looking for in an interim report. It was 

clear, plain spoken and I think comprehensive, and I want to 

emphasize again, interim report. I've been watching the news and 

reading the papers, and I thought I'd missed a couple of 

meetings, because there were things that they were saying 

about -- I know not me in particular, but I didn't remember 

having proposed any specific plans or solutions, or as Bob said, 

solutions that could actually strengthen the program for the 

people that I'm concerned about, low wage earners, people in the 

Hispanic community, Latinos, people in my community, a working 

class community where 25 percent of the people live below 

poverty. I'm not here to gut Social Security; I'm here to 

strengthen it. So I would caution everyone to, again, recognize 

that this is an interim report. And we are only now, not even 

yet, beginning to consider what those options are, obviously with 

a focus on creating some sort of private accounts, which I 

strongly favor for many of the same reasons that have already 

been proposed. So again, I would just caution everyone to, 

again -- not us, but folks outside this room and in this room 

that are already opposed to what we're proposing before we've 

even proposed anything. 

The only thing that I would add in terms of a 

recommendation for the interim report, and it's handled to some 

degree in the summary letter at the beginning, but it's 
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interesting to me. Even after participating in this since 1994, 

you hear different interpretations of the numbers, and it 

sometimes still confuses me about what folks are trying to do 

with those numbers. So to some degree, to the degree that we can 

create a very simple, I don't know, PowerPoint presentation that 

kind of lays out in a few pages kind of the issues that we've 

addressed in terms of the shortfall, the 2016 date, the 2038 

date, what it really means in as plain a language as possible. I 

want my 11-year-old son to be able to understand, if possible, 

what this really means. 

Finally, again I think we've met the goals in the 

interim report. One is to educate the public about the problem, 

and secondly now to get into the design of the problem, and I 

just want to reiterate again that I just hope that we're able to 

have an environment here in the Capitol that allows us, us and 

also the Congress who will ultimately create law, to craft 

something that really does strengthen Social Security. From the 

tone of the debate so far and from what I've seen in press 

releases, it doesn't look like that's the case, and that's 

unfortunate. I'm hopeful that we'll be able to change course and 

have folks really come to the table with open minds about how we 

can strengthen Social Security. Thank you. 

CHAIRMAN MOYNIHAN: Fidel, I wish you well with that 

11-year-old son, but I'd settle for 40-year-old. We're just at 

the beginning here. 
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MR. VARGAS: Yes, it's not over. 

CHAIRMAN MOYNIHAN: Not at all. Isn't that right, 

Gwen? 

MS. KING: ---

CHAIRMAN MOYNIHAN: You're next. Commissioner. 

MS. KING: Thank you, Mr. Chairman. The advantage of 

sitting on this side of the hollow square is that by the time 

your turn comes around, most of what you planned to say has 

already been said, and very well stated I might add. 

Senator, I really do appreciate your giving us the 

background you gave us, because if you read only the critical 

comments that continue to show up in the press, you'd think that 

we were the first ones who ever came up with these ideas. It's 

really nice to have the context that a lot of this has been 

talked about and thought about before. We do indeed have a 

problem. 

So I, too, need to say thank you to Chuck and his staff 

and to Steve for putting together the thoughts that we asked you 

to put together in that plain English that I asked you to do, and 

it's going to be more important I think going forward as we begin 

to look at solutions, because people will have to understand 

where we're coming from.

I am astounded, innocent perhaps but astounded, that 

something so plainly laid out could be so quickly and thoroughly 

misunderstood and misinterpreted by people who do not wish us 
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well. I agree with Bob; it's going to be very important for us 

to continue to express ourselves and to let people know what it 

is and what it is not that we are about. The debate will 

continue. People of goodwill will see the problem as a glass 

half empty or a glass half full, but we still I think have a 

responsibility to press on. 

As a former Commissioner of Social Security, I have 

made a number of the arguments that I have heard people who are 

just I think fearful of taking a new approach are making today. 

Of course, our Trust Fund is backed by the full faith and credit 

of the United States government. Who better? They are going to 

meet the commitment. I think as we look at the magnitude of the 

problem, we realize that we can take some action that will 

mitigate the requirement for the United States government to take 

such draconian action as will be necessary if indeed we do 

nothing. So I think we are focused on preventing a real crisis. 

 We are focused on taking the 37 years or the 15 years to get 

something going, and I think we have that responsibility to the 

American people and we should not shirk from it. 

Others have spoken about progressivity. I will not. I 

do want to stress the importance of a program that no one is 

talking about eliminating, and that is the survivors' program. 

It is true and you've heard all the statistics here today, that 

blacks do benefit from disability and survivors' programs at a 

much higher rate. I think that is so important to continue, but 
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in my reading of everything that we are charged to do, no one is 

suggesting otherwise, and I think it is important that the public 

understand that. 

My views have indeed evolved over the years, helped in 

large measure by the writing of a Newsweek columnist named Alan 

Sloane. He's probably the only columnist that I have ever 

written to and said well done, the only columnist. Those of you 

who know me personally will be shocked by that, but he's probably 

the only one I've ever written to. And his column this week I 

think is equally compelling. I ask you all to look at it. I'm 

not pushing the letter. I'll give you copies I guess from 

something else, but look at it. It's a very compelling treatment 

of the Trust Fund issue, and we don't have to say very much more 

about it. 

The asset and the Social Security fund is our 

government's promise to pay back what it has borrowed. So, of 

course when you ask the next question, how will it pay back 

$1 trillion, I think you get a very interesting answer. The 

problem perhaps becomes a lot clearer.

For those of us who do support personal retirement 

accounts or some iteration of that, I think it's also important 

to talk about the need to counsel people who will perhaps for the 

first time be asked to look at personal investments. If any of 

us goes to an investment counselor, the first thing they will do 

is sit down and counsel you on what your tolerance is for risk 
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and where you might be taking your planned account. I think we 

need to set aside resources to do that for people who will be 

taking on perhaps something for the first time in managing 

retirement accounts, and we need to be very, very circumspect and 

conservative in the approach that we take there. 

So in sum, I think we've laid out a lot of the 

problems. I don't think it will be the responsibility of this 

body to try to find solutions to every one of the problems that 

we laid out. I would ask us to look at work that has been done 

very carefully by others. Particularly, I just received the 

Social Security Advisory Board's latest publication on what 

action should be taken soon. They've laid out a whole litany of 

approaches that ought to be, I think, folded into some of the 

work we do. We are not going to rehash the ground that they have 

so carefully looked at, but I do think it's going to be very, 

very important to keep the focus, to do our deliberations and our 

work without being distracted by the outside voices that would 

take us off our course. 

Again, I too commend the staff of this group for 

listening to us and for the work you've done, and also to this 

commission for taking on the task that I think is going to put us 

on the path of getting away from the problem that we see and 

maybe a little daylight at the end of the day. Thank you, 

Mr. Chairman. 

CHAIRMAN MOYNIHAN: Thank you, commissioner. I think 
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the Social Security Advisory Board -- if we could make it 

available to our members, the commission. It's a very handy 

piece of work and well read. Let me just say -- affirm what you 

have said. There is no question that we are committed to seeing 

the survivors' benefit and the disability benefits maintained. 

They are integral to the program. 

It just happens -- you'll have to get used to this, 

fellows, but in an article in The New Yorker recently, which 

began shortly ---, "In the middle of the last century, Daniel 

Patrick Moynihan wrote an article." Got that? Middle of the 

what?

(Laughter)

CHAIRMAN MOYNIHAN: Oh, yes. But I knew Francis 

Perkins. She was very active in the '60s in Kennedy's 

Administration, and you must remember that when as industrial 

commissioner in Albany under Al Smith and so forth, the rate of 

industrial accidents was so very high in our country. There were 

widows everywhere, and not to provide for them and their children 

would have seemed why have a program? It's not just retirement. 

 That happened to the ones who got lucky, but the reality was the 

fellows who were lost in the mill and there were widows and 

children who were left behind. So we don't even -- we're with 

you, Gwen, and Tim Penny. I think we're with you as well. 

MR. PENNY: My turn, right?

CHAIRMAN MOYNIHAN: Yes, sir.
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MR. PENNY: Thank you, Mr. Chairman. Everybody has 

commended the staff. So do I. I want to speak to one aspect of 

the report, and that is the tone of the report, because 

rightfully, this report lends a sense of urgency to this issue. 

It's interesting to observe that one of the criticisms that has 

been leveled over the last seven days is that this report is 

unnecessarily alarming. We ought to be alarmed when in just a 

few short years the baby boom cohort hits retirement age, begins 

to hit retirement age, and the costs of this system begin to 

explode. As was mentioned by Mr. Parsky earlier, better to plan 

ahead for that eventuality and to phase in necessary and modest 

reforms now so that we can make this adjustment gradually, than 

to wait until the last minute when our options will be limited 

and the choices will be unlovely to say the least. 

We've been there before. We've done that before. And 

it is living proof that on an issue like this we too often wait 

not only for a sense of urgency, but for the moment of emergency. 

 In 1983, my first year in Congress, when we voted for the Social 

Security reforms recommended by what is now referred to as the 

Greenspan Commission, we were in the middle of a crisis. We were 

taking money out of the Medicare fund to pay monthly Social 

Security benefits. The emergency was very real, and even then it 

took the leadership of a Senator named Moynihan and a colleague 

named Dole to put that commission back on track and to give us a 

report that we could ultimately support on a bipartisan basis. 
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So those who criticize the tone of the report because of its 

sense of urgency are in my view crediting this report for one of 

its strongest features. We need a sense of urgency around this 

issue in order to challenge Americans and America's political 

leaders to deal with this issue now while there is time for us to 

phase in the necessary reforms. 

Those who criticize this report also seem to hang their 

hat on the Trust Fund. How have we used the surplus which is 

credited to that Trust Fund over the course of time? Up until 

recently we spent it, because we were overspending the rest of 

the budget. Now, arguably a better use of that surplus, we're 

paying off some debt, which in a broad sense helps us with the 

totality of the federal budget over the longer term, but it's not 

as if there's any real money here. And when we assign interest 

to the money in the Trust Fund, we're basically promising that 

somehow we'll come up with that money as well. 

The bottom line is the Trust Fund is backed by the full 

faith and credit of the Federal government. I want to stress the 

word "credit," because if there isn't money there, it's backed by 

our ability to borrow to put money there. But I don't think 

that's good enough, because it basically -- if we wait and rely 

on the, quote, unquote, "credit" of the Federal government, we're 

basically saying that it's alright to just ignore this problem 

today and push the cost of solving this problem off on to future 

taxpayers, many of whom aren't even voting age today, many of 
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whom aren't even born today. I don't think that's responsible 

public policy. 

Most of the critics seem to insist that we can solve 

this problem with no benefit adjustments. So that means that 

their alternatives to make the Trust Fund real are essentially 

these three: to raise taxes; to cut into the other programs of 

government, domestic and defense, in order to make money 

available for the Social Security system; or again, to rely upon 

enormous amounts of debt, tens of trillions of debt, over the 

next several decades. 

The chart at the front of the room to Chairman 

Moynihan's immediate left is the baseline for this debate. The 

blue line indicates the amount of revenue that we can project for 

the Social Security system on into the future. The dotted red 

line indicates the amount of benefit obligations that we are 

making in the program. This, in my view, is the baseline against 

which all reform plans must be measured, and the success of any 

reform plan ought to be gauged by the degree to which we exceed 

that blue line and the duration with which we stay above that 

blue line. There's no denying that year in and year out there 

may be situations in which we cannot keep this underlying Social 

Security program in absolute balance, but again, I think any 

reform plan, if it is to be taken seriously, ought to begin to 

bring that dotted red line closer to the blue line and reduce the 

total debt that we are exposing future taxpayers to. 
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CHAIRMAN MOYNIHAN: For those who aren't up close, this 

is 2016. 

MR. PENNY: 2016. Thank you, Mr. Chairman, for 

stressing that, because I wanted to include that in my closing 

remark, which is this: 2016, the point at which those lines 

cross, is not that far into the future. There is a reason for 

urgency. I applaud the report for its sense of urgency. I 

believe it does set the stage for the kind of debate that needs 

to occur. It does establish the baseline against which all 

responsible plans ought to be measured. Many of the critics of 

this commission's work won't do a thing to change that chart, and 

that is unacceptable. I believe this interim report will help 

set the stage for our ongoing work and the recommendations that 

will ultimately flow from this commission's work. Thank you. 

CHAIRMAN MOYNIHAN: Thank you, sir. I wonder if we 

might not consider including this in our report as tables at the 

end. 

MR. BLAHOUS: Yes. We'll include it with the report. 

CHAIRMAN MOYNIHAN: And I'd just like to say to 

Congressman Penny, in that 1983 intense 10 days that we put 

together a package after we had deadlocked for a year on a formal 

commission, Bob Myers, the chief actuary Steve Goss will know and 

revere, who came to Washington as a graduate student of Edmund 

Witty who was chairman of the Committee on Economic Security that 

proposed Social Security, he had to listen to Bob Myers say 
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something he'd probably never thought he would be saying, which 

is that in six months' time we will not be able to pay benefits. 

 I don't know quite if it was six months, but he was saying we 

will not get through this year without defaulting. So don't 

think emergencies can't happen. It's just that they have been 

overcome. Mario Rodriguez. 

MR. RODRIGUEZ: Well, that's a hard act to follow 

there, Tim. Anyhow, I'd like to commend the staff for putting 

together a very well laid out interim report. What was alarming 

to me was to see how the minority community is affected by this. 

 I mean in particular African Americans, the women, and the 

Hispanics. It's a shame and a tragedy that Hispanics in this 

country have available in their savings account, CDs, 

retirement -- set aside for retirement $1,200 on the average; the 

African American, $3,000. That tells us right now this is about 

helping the people that need to be helped, the Americans that 

need to be helped in this country. It's not about helping the 

rich. This is about helping the medium and the lower income 

people that really need Social Security. So I'm offended when 

we're getting criticized, for out there saying we're going to 

destroy Social Security. We're not going to destroy Social 

Security. What we're here to do is help save Social Security. 

So that really bothers me when we're getting attacked like we 

are. 

There is a recent survey commissioned last week that 
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Hispanics in this country, 62 percent favor taking a portion of 

their Social Security and investing it in the market. So this is 

something that's real. This is something that needs to happen in 

order to help Americans in this country for their future. 

So in saying this, I just feel that we need to stay on 

track. We're going to be criticized a lot, but the bottom line, 

we're here to help the American public in this country. Thank 

you. 

CHAIRMAN MOYNIHAN: Thank you. Mario, could we get 

that survey, the questionnaire you just described?

MR. RODRIGUEZ: Absolutely. Senator, in fact I have a 

copy for each of the commissioners with me. 

CHAIRMAN MOYNIHAN: Oh, good. Oh, good. Excellent. 

Thank you. Estelle James.

DR. JAMES: Well, first of all, I'd like to 

congratulate the staff on preparing what I consider an excellent 

report. As you know, I've already told you I thought it was an 

excellent report because it identified the key problems in a very 

readable way, and I think that was this task. In the report we 

identify 2016 as a critical year for Social Security, and this 

has aroused a lot of objections because it moves the sort of DDay closer and makes the whole problem more imminent. So I would 

like to explain in my own words why the year 2016 is important

and possibly some of these words could be incorporated into the 

final version of the report. Of course, what I say will echo 
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what several people around the table have already said, but 

everyone says things in a slightly different way. So I hope you 

will bear with the redundancy. 

Now, we all know that during the past 15 years Social 

Security has been running a cash flow surplus every year, and 

this extra cash has been turned over to the U.S. Treasury which 

used the money to finance government expenditures, and the 

Treasury issued IOUs to the Social Security Trust Fund in 

exchange. Now, through these IOUs, the government is in effect 

borrowing from Social Security, and the government has an 

obligation to repay that money when it's needed. Social Security 

will need that money starting in 2016 when the cash flow deficit 

becomes negative instead of positive. That is, the expenditures, 

that line that we just talked about, the expenditures will exceed 

the incoming contributions in 2016 and by ever increasing amounts 

after 2016, as you can see that line go up. This happens, as we 

all know, because the baby boomers start to retire, so more 

people are collecting benefits and fewer people are contributing. 

Now, at that point the Social Security Trust Fund will 

begin redeeming the government IOUs, and of course, everyone 

expects the government to honor those IOUs. No one questions 

that, so I think it's really strange and irritating for our 

opponents out there to be insinuating that we're questioning 

whether the government will do that. Of course the government 

will do that. Social Security will get this money. However, 
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finding the money to give to Social Security will pose a big 

problem for the rest of the government budget starting in 2016. 

That's what we have to recognize, and perhaps the report could 

emphasize this a bit more. 

So I just want to spell out some of the implications of 

what will happen at that point. Now first, we could compare the 

borrowing from Social Security with borrowing from the rest of 

the public. When the government borrows from members of the 

general public, for example, from you or me or private pension 

funds who hold government bonds, the government issues bonds, and 

these bonds appear on the government's balance sheet. Right now 

almost $3 trillion in bonds appear on the government's balance 

sheet. However, when the government borrows from Social 

Security, the IOUs that it issues do not appear on the 

government's balance sheet. This is because they are sums that 

are owed by one part of government to another part, so it's an 

internal transaction. This is a debt, but it's a hidden debt. 

We've hardly known that it's there, and people are kind of 

disturbed when we begin talking about it. In 2016 we will have 

to, we will be forced to, recognize that hidden debt and to deal 

with it, and that will not be easy. 

Now, just to give you an idea of the magnitudes 

involved, at present the Social Security Trust Fund is holding 

government IOUs that are equivalent to about $1 trillion, and 

it's projected that by 2016 this will grow to over $3 trillion in 
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current dollars, that is, adjusted for inflation. Now, just to 

get an idea of what that magnitude implies, $3 trillion is more 

than our entire national debt, that is that stated explicit debt 

that the public is holding. It's more than that entire debt is 

today, and it's much more than our entire national budget is 

today. So these are not trivial amounts that the government will 

have to start redeeming in 2016. By 2016 Social Security will 

have lent to the Treasury more than all other lenders have lent 

to the Treasury today. Now that's a lot of money, and when 

Social Security begins to redeem those IOUs in 2016, the Treasury 

will have to come up with a lot of money from somewhere else. 

Now, we all know the places that the Treasury can look. 

 First of all, the government may try to raise this money by 

selling bonds to other parties. That's the first line of 

defense, you might say. This would have the effect of increasing 

the national debt that appears on our balance sheet, because the 

money will now be owed to people outside of the government. We 

may have to pay a higher interest rate to sell these additional 

bonds in the market place, and we'll have to pay that interest 

rate out in real money every year, instead of making a 

bookkeeping notation. So at a time when we're trying to reduce 

the debt, we will instead find this explicit debt on the books 

increasing and the debt service will be increasing, and this 

burden will eventually have to be paid off by future generations. 

Now, if the government decides that it should not raise 
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the debt, it then will be faced with a difficult choice of 

raising taxes or cutting spending on other important national 

priorities. For example, this might include cuts in health and 

educational spending, which we all care about and which are two 

other places that Congress might look at that point in order to 

honor these IOUs to Social Security. None of these will be easy 

choices to make. 

Now, when we reach 2038, all those IOUs in the Trust 

Fund will be fully redeemed, and the money will have been paid 

out to beneficiaries. At that point the choices will become even 

more difficult. The Trust Fund won't have any IOUs, but the 

government will still have a moral obligation to pay millions of 

pensioners who have contributed all their lives, and they're 

expecting to receive Social Security benefits in return. On the 

one hand, we won't want to let them down. No one will want to do 

that. But on the other hand, we'll have a hard time coming up 

with the money. 

This financing gap, as was already stated, this 

financing gap will continue indefinitely. There's no end. It's 

a permanent problem. Again, the choices will be: do more 

explicit borrowing, which will lead to a larger national debt, 

raise taxes, or cut spending on benefits or other important 

goods. Those are the choices. They will be the choices in 2038, 

and they are the same choices that we will have to make by 2016. 

 That's why 2016 is a critical year. We won't be able to avoid 
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making those choices any longer. 

Now, intelligent people out there can disagree on the 

solution. We don't all see the world the same way, but they 

cannot disagree that a problem is looming ahead of us. That is 

irresponsible. We will have to face that problem in 2016 whether 

we like it or not. The IOUs will keep growing. We already saw 

they would grow from $1 trillion to $3 trillion in 2016, and the 

choices will become more painful if we keep our heads in the sand 

and wait until 2016 arrives. They will be much easier and we'll 

have much more degrees of freedom, as everyone here recognizes, 

if we start planning and filling in the gap now. 

The commission's job, a thankless job in a way, is to 

begin taking responsibility for solving this problem. So I also 

have a message to all those people out there who have been 

objecting to this report. It would be much more constructive, 

much more helpful to the country if instead of simply attacking 

the commission for reminding us of the fact that we face an 

unpleasant problem, if you came up with solutions, if you helped 

us find solutions for the problem. There are diverse solutions, 

and we would welcome your input. Thank you.

CHAIRMAN MOYNIHAN: A high-minded thought. 

(Laughter)

CHAIRMAN MOYNIHAN: On va voir. Bill Frenzel. You 

have been studiously working away. This is our artist in 

resident, if you don't know that. You want to show us some of 
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your product for the morning? 

MR. FRENZEL: Well --

CHAIRMAN MOYNIHAN: There you are. That's pretty good. 

How do you -- hey, hand that over here. 

(Laughter)

MR. FRENZEL: That will cost you money, Mr. Chairman. 

CHAIRMAN MOYNIHAN: That's not bad.

MR. FRENZEL: I don't give those out to just anybody. 

CHAIRMAN MOYNIHAN: I thought maybe as a member of the 

commission you might consider the possibility --

MR. FRENZEL: Well, we might be able to make an 

arrangement, depending on the language. Mr. Chairman and other 

Mr. Chairman and fellow members of the commission, thank you very 

much. I have been sort of basking in the brilliance and the 

articulation and general all around good looks of my colleagues 

here. It has been I think a wonderful morning, and all I can say 

is, Mr. Chairman, I wish I had said all the things that they 

said, because they said them well and I support all of them.

I want to start making the point, however, to thank the 

people who have sent emails and letters to the commission. The 

staff has faithfully forwarded them to members of the commission. 

 We are trying to read them. We are getting a couple inches of 

them each week, in addition to the notebooks, the books, and the 

longer papers which are being thrust upon us. Many of us are 

private citizens. We don't have any way to respond to you, and 
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so I'd like to say right now, thank you for your ideas, and to 

tell you that they are being read and they are being appreciated. 

 Now unfortunately, not all of your instructions will be 

followed, however. I do note that in many of these 

communications, the communicators do not seem to have what I 

would consider to be a full understanding of the Social Security 

system. We can't handle that all by ourselves on this 

commission, but this interim report, at least in my view, is an 

attempt by us to tell the American people what is the problem 

with Social Security and what is in fact the case with many of 

the elements of Social Security. It is now being roundly criticized b

the street, whereupon I was stuck by a taxicab. After thorough 

inspection, it was determined that the taxi was okay, and it 

proceeded. I thought at the time that they probably thought this 

was Geneva and this was the headquarters of the WTL. However, I 

heard their chant being given to them by a chap with a bullhorn, 

and it was, "Hey, hey, ho, ho, Bushy Wushy has to go." So they 

were in the wrong place. They wanted Pennsylvania Avenue, I 

guess, about 1600. 

But that's what I think of some of the criticism that 

we have received, a sort of know-nothing Luddite approach, to do 

nothing. For those who are critical of this draft report, which 

has not been approved yet of course, I wonder what they will ever 

do if we approve something. That's a little frightening to think 

of, but I hope people will do us the favor of reading our report. 
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I believe that the draft which the staff has presented 

us, as many members have indicated already, really does represent 

the instructions that were given to the staff at our last 

meeting, and there's a pretty good statement, we'll all fly 

specket (sic). We have already done some of that. It was 

amended a number of times so far, but in my judgment the most 

important message of the draft is what all of you zeroed in on, 

and it is that the worst thing that we can do is to do nothing. 

That is not an alternative. Inaction is the enemy of the system. 

 In 1981 the third rail of politics scared the Congress into not 

doing anything for a couple of years until, as my colleague Tim 

Penny pointed out, we were left with the wonderful compromise 

engineered by one of our co-chairman. And what was it? It was 

raising taxes and cutting benefits. We waited too long in that 

case, and we cannot afford to wait too long in this case. Again, 

my congratulations to my colleagues, Mr. Chairmen, and I want you 

to know I'm letting you out in time to eat lunch. 

CHAIRMAN MOYNIHAN: That was a very fine statement, 

sir, but I have to tell you, having lunch does not have the 

priority this commission is hearing from the co-chairmen, but we 

will get lunch. Don't you doubt it. Thank you very much, sir.

MR. PARSONS: It will be before noon. 

CHAIRMAN MOYNIHAN: No, no, no. Come on. 

MR. PARSONS: No, in part because, as a great man once 

said, "Everything has been said." It's just that not everybody 
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said it. But to try and be brief and to bring this all together, 

I would again remind us all and the public who is here that this 

is a draft of an interim report. What did we set out to do in 

the interim report? Really two things. One, to draw attention 

to the problem that we perceive and others perceive that the 

Social Security system is beset with. I think on that score, 

you'd have to give us an A. We've certainly drawn some attention 

to it. The second thing that we set out to do in this interim 

report was to illuminate the problem, to educate people as to 

what the nature of the problem was, in the hope that that might 

tease out from the public and from the members of this commission 

as well, as well as staff, some suggested solutions on how are we 

going to deal with this problem once we all acknowledge that it 

exists and we understand its dimension. In terms of illuminating 

the problem, I'm not sure I give us quite as high marks as I gave 

us in terms of drawing attention to it. 

I think that the comments that were made around this 

table hopefully have carried by the electronic media and the 

print media far and wide will help to further illuminate, and in 

that sense I had two points that I want to go back to. They've 

been touched on, but I want to touch on them again from the 

illumination perspective. But before doing that, I wanted to say 

a word about tone. Tim mentioned that the tone was interpreted 

as being urgent, and I do think the problem is urgent because we 

need to get started with solutions now. However, there were some 
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parts of the report that maybe were more urgent or at least 

ambiguous and could lend themselves to being alarmist than I 

think we need. 

I take credit for foisting what may be an unfortunate 

phrase upon the draft report. In the preface which Senator 

Moynihan and I worked on, we say the system is broken. Maybe 

that goes too far. Certainly it's open to lots of different 

interpretation. Currently, as was pointed out by several people 

including Pat this morning, there is no jeopardy to current 

beneficiaries in terms of getting their checks, the soon to 

retire. In fact, our charge is to make sure that those benefits 

stay intact. What is clear is that the system as currently 

constructed is unsustainable, financially unsustainable. 

CHAIRMAN MOYNIHAN: Yes, yes, yes, yes.

MR. PARSONS: It just can't go on the way it is today. 

 What that means is, that sometime between now and the point in 

time when the system does collapse because it's financially 

unsustainable, a solution will be put in place. A fix will be 

put in place, and our argument, our fundamental perspective is 

that dealing with that problem sooner rather than later is going 

to make the ultimate solution more palatable to more people, less 

dramatic, less draconian, less crisis-driven. So our plea, if 

you will, not only to the public at large but to those who have 

criticisms, some legitimate, some not, of the direction the 

commission is going in, is let's not stick our head in the sand 
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and refuse to acknowledge that we have a problem and a problem of 

a nature where a solution applied now or sooner is going to yield 

a better result than waiting until the crisis moment actually 

strikes. 

The two points that I'd like to come back to for 

further illumination, one, just in reading the commentary of some 

of the people who criticize, they refer to -- and they set up 

little charts and they refer to existing Social Security benefits 

and what they presume this commission is going to recommend, even 

though we haven't recommended anything by way of solution yet, 

but they -- replete on the existing side are terms like 

"guaranteed," "predictable" retirement benefits. This 

"guarantee" of lifetime income, guarantee, guarantee, guarantee. 

 One of the things that we hope not only the critics but the 

American public focuses on is -- I am a lawyer by training. I 

have since taken honest work, but by training I'm a lawyer and 

words have meanings. There is no guarantee in the existing 

system. 

One of the things we pointed out in our cover letter, 

the Supreme Court of the United States has said that individuals 

do not have a legal right in Social Security benefits. They can 

be changed. They can be eliminated. Flemming versus Nestor. 

What you do have, and several of my fellow commissioners use the 

term, you have a "promise," but a promise frankly from people you 

don't even know, because who is going to be in Congress in the 
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year 2016 or the year 2025 or the year 2040? I have no idea. I 

just know it's not going to be Pat or me. Those are the people 

who the public is going to have to rely on to keep the promise. 

There are no guarantees, and folks seem to think that somehow the 

current system is guaranteed and this commission, even by raising 

questions, is jeopardizing or threatening that guarantee. What 

we're trying to do is strengthen the promise, not diminish the 

presumed guarantee, because there isn't one. 

Secondly, and I'm going to go back to this issue of 

2016 again, only because I know that we're visiting millions of 

American households thanks to C-SPAN and some others and we can't 

overemphasize this point of what happens in 2016. Gwendolyn 

mentioned Alan Sloane. It's not customary for me to give a lot 

of visibility, let alone praise, to one of my competitors, but in 

this case he deserves it in his article in Newsweek. 

So that you understand what this whole debate about 

what happens in 2016, I'm going to paraphrase his article, where 

he said think of it this way. Let's assume any one of you or --

well, take me, because I'm a perfect example. I decide at some 

point that it would be good for me to set up a retirement account 

for myself. So I set up the account, and I have every good 

intention of funding it, of putting money into the account, so 

that when I retire I've got some money set aside. However, I 

also, as you remember from the last commission, like the good 

life, and I can't quite make my income cover both my current 
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lifestyle and my obligation to make commitments to my retirement 

account. So instead of actually putting cash into my retirement 

account, I put an IOU. So instead of sending $1,000 a month or 

whatever it is to the retirement account, I write a little IOU

$1,000 and I sign it Dick Parsons. Then in the fullness of time 

it comes time for me to retire. I'm now looking to my retirement 

account to fund my retirement, and what I have in there are 

hundreds upon hundreds of $1,000 IOUs. Well, I've got good 

credit. I can make it good, but frankly, what I've got to do to 

get cash in there, because as Tom Saving says, I still have that 

lifestyle that consumes real cash, I either have to keep working 

to pay off the IOUs or I have to borrow money from somebody to 

pay off the IOUs or I've got to sell something to pay off the 

IOUs. The IOUs, since they are from myself to myself, they're 

real but they have no financial gravitas. They're not 

substantial. And I've got to continue to do something in order 

to redeem those promises. That's the situation our government is 

in. 

Our government has given to the Social Security Trust 

Fund, as Estelle said, trillions of dollars worth of IOUs, and 

when it comes time to pay off those IOUs, the government is going 

to have to do something. It's either going to have to raise 

taxes, it's going to have to cut other spending, or it's going to 

have to go back to the debt markets and borrow. All this 

commission is saying is that that is the point in time at which 
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this problem really begins to bite, and let's not wait until then 

to try and find a solution. Let's use the time we have from now 

until then to restructure the system in a way that creates real 

assets behind the promise, so that it is more certain of being 

fulfilled than it is currently, that creates more equity within 

the system, as Bob and others have said, for particularly single 

women and minorities, and that creates a greater sense of 

confidence on the part of the American people and where are we 

going with Social Security. 

I will say this. Those who argue that we are creating 

fear tactics and alarm among people, I know from countless 

numbers of conversations that people my age and slightly younger 

currently do not believe, I mean they really -- they understand 

that there are no guarantees in Social Security and they don't 

believe that it's going to be there for them when they get older. 

 So we're not talking about taking anything away from somebody 

who's got it now. I would remind us all that the very Executive 

Order that set up this commission said that one of our charges is 

to protect current levels of benefits --

CHAIRMAN MOYNIHAN: Exactly. Exactly. 

MR. PARSONS: -- and benefits for those soon to retire. 

 What we're talking about is creating a sense of genuine 

confidence and optimism on the part of younger Americans who are 

currently funding the system and who have a right to look forward 

to something being there when they retire. So thank you, 
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Mr. Chairman. 

CHAIRMAN MOYNIHAN: Mr. Chairman, but couldn't I ask --

suggest that we have a further charge, which is not just to 

preserve this existing system and existing benefits, but as Bob 

has suggested and Mario has suggested, to go in a pattern that 

Franklin Roosevelt would have loved, to say workers can end up 

their working lives with a measure of wealth.

MR. PARSONS: I think the two go hand-in-hand actually. 

CHAIRMAN MOYNIHAN: Yes. Sure.

MR. PARSONS: Because creating confidence in part 

because you control some portion of your own destiny and you have 

a legal entitlement to it. 

CHAIRMAN MOYNIHAN: Yes. You do have, though, funding 

as you've said that the Court ruled. That was Secretary of ATW, 

funding under Mr. Eisenhower. There's no property right in 

Social Security. There would be a property right in individual 

accounts. Well, any more comments, or shall we adjourn for a 

sandwich and then we'll be back at 2:00 o'clock?

MR. : One o'clock. 

CHAIRMAN MOYNIHAN: At 1:00 o'clock, and we'll continue 

until 2:00. Then you could all go out and talk to the 

demonstrators. Give them --

(Taping interrupted)

CHAIRMAN MOYNIHAN: -- statement two. A member of the 

press did not hear --- the statement one, which is that the 
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meeting will resume shortly, continue to 2:00 o'clock, after 

which there will be a press conference. 

(Luncheon recess)
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A F T E R N O O N S E S S I O N

(1:13 p.m.)

CHAIRMAN MOYNIHAN: I will wait until all the 

commission members are present, but it would be my purpose, and I 

think Mr. Parsons agrees, to declare that we have basically 

accepted and approved the interim report subject to the changes 

that have been suggested and which will be made. There's enough 

of us here just now to start. I would like to move -- we're 

going to be very informal in our proceedings, but use some of the 

terminology. 

MOTION

CHAIRMAN MOYNIHAN: I'd like to move that the 

commission approve the interim report subject to the changes that 

have been proposed this morning and I think all of which were 

well accepted by the group.

MR. JOHNSON: I second that motion. 

CHAIRMAN MOYNIHAN: We're open to debate.

DR. MITCHELL: Just a quick question. I just haven't 

had a chance to read the latest revision, so you're saying 

conditional on those being approvable.

CHAIRMAN MOYNIHAN: Yes. Yes.

DR. MITCHELL: Thank you. 

CHAIRMAN MOYNIHAN: But hurry up. 

(Laughter)

CHAIRMAN MOYNIHAN: Very well. I see the mood of the 
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commission is agreeable to that and I declare the motion carried. 

 Now, we have one further but important piece of business for the 

afternoon which is the --

MR. PARSONS: Remind me when I grow up I want to be a 

great man. 

MR. : It makes everything easier. 

CHAIRMAN MOYNIHAN: Each of you has before you a list 

of questions that we would like to put to the persons who appear, 

the public, in the hearings which we will be holding in 

September, in San Francisco in the case of Mr. Parsons, in New 

York City in my case. I think, Mr. Blahous, it might be the best 

thing for you just to walk us through. 

MR. BLAHOUS: I would be happy to.

CHAIRMAN MOYNIHAN: This is just something we will make 

available to the public, but people can come and talk about what 

they have in mind. 

MR. BLAHOUS: Earlier the commission had indicated, 

Mr. Chairman, that there was a desire to have hearings in 

September at which input from the public would be heard on how to 

resolve the challenges that have been identified in the interim 

report. Working over the last several days with individual 

commission members, we have drawn up a tentative, and of course 

highly revisable, list of questions that could be posed. It was 

suggested that the questions should begin by covering the area of 

the design and structure of personal accounts and proceed later 
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in the questions to questions of systemic financing. We have 

tried to order and organize the questions to follow that system. 

Unlike the interim report which was drawn up with 

consultation from every member of the commission at some point 

along the way, thus far we have only received concrete textural 

suggestions on these questions from about half of the commission. 

 So in order for these questions to be put before the public in 

early August to provide for sufficient time for public responses 

for the September hearing, we would like some direction from the 

commission on possible changes to these questions and preparation 

for their release in the next couple of weeks. 

CHAIRMAN MOYNIHAN: You're going to put them on the 

website. 

MR. BLAHOUS: We will post them on the website. 

CHAIRMAN MOYNIHAN: Very well. The floor is open to 

comment. 

MR. FRENZEL: Mr. Chairman, may I inquire as to what 

kinds of witnesses they are going to hear from? It looks as 

though we are not having any economists. Perhaps they've already 

delivered lots of opinions on the system. 

MS. : Do we have a list?

MR. FRENZEL: Do we have any kind of list of potential 

testifiers? 

CHAIRMAN MOYNIHAN: I don't think we do, but I think we 

ought. I think we ought to think about persons we would 
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specifically ask.

MR. FRENZEL: My guess is if we open it up, everyone in 

the world will want to be on the list. 

CHAIRMAN MOYNIHAN: Well. Mr. Blahous.

MR. BLAHOUS: Yes. I will say that with respect to the 

August meeting, some ideas have already been circulated among the 

commission, some suggested by the co-chair and others, regarding 

people who might explain the administrative setup of the Thrift 

Savings Plan and other similar systems for administering personal 

accounts, and those plans are already in place or are being 

developed. 

With respect to the September public hearings, I think 

what is being considered is sort of a broader cross section of 

members from the general public, certainly people who have 

sponsored congressional proposals, leading economists. I think 

the general desire is that there be a balance both in terms of 

viewpoints expressed but also in the types of backgrounds of 

people who would present. 

CHAIRMAN MOYNIHAN: We are expecting one-day hearings?

MR. BLAHOUS: Well, actually there has been the 

suggestion made, and perhaps Estelle might want to elaborate upon 

this, but one suggestion that has been made, that even though we 

are setting up one day for a hearing on the West Coast, one day 

for a hearing on the East Coast, this does not preclude the 

commission from dividing into smaller groups and hearing 
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separately from those who want to put forward testimony, to 

increase the number of people that can be heard from on those 

days. 

CHAIRMAN MOYNIHAN: Sir. Bob.

MR. POZEN: I would like to suggest that we -- that in 

order to make this more efficient, the hearings, that first of 

all we ask people who want to testify in these hearings to submit 

by a certain date a short statement in response to one or more of 

these questions and limit that statement to no more than, say, 

three pages or something, and then if that goes to the staff, 

then the staff can cull through them and select A) people who are 

particularly thoughtful, and B) people who are bringing some new 

perspective, and C) make sure that we have an appropriate 

representation of both economists, public people, you know, 

public --

CHAIRMAN MOYNIHAN: And different points of view.

MR. POZEN: And different points of view. And I would 

say, and to pick a number of people who would then fit within one 

day, so that we can have the benefit of the comments of all these 

people through the three-pager, but that I don't think it's 

feasible for us to have personal testimony from everybody who 

wants to testify. We might spend all of our -- the hearings 

might have to go on for weeks or months, and I don't think that's 

a predictably efficient way for us to get information. 

SENATOR MOYNIHAN: Mayor.
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MR. VARGAS: Co-chair, I think there might be some 

precedents in the past in terms of other, not commissions on 

Social Security but other commissions that have taken public 

testimony. 

CHAIRMAN MOYNIHAN: How did you do? How did you have 

to --

MR. VARGAS: We had several public comment sessions 

that were limited, and I think our comments -- the comments of 

those who testified were limited to a certain amount of time. I 

think it was five minutes. But what I was going to suggest, to 

look at those other commissions for some guidance, because I 

think you're right, that either it's a limit in terms of the 

amount of time that someone gets to speak, or they submit their 

full testimony, something that would allow us to get as much 

input as possible and also make it practical for people to be 

able to give their comments in public. And obviously not 

everyone is going to have the opportunity to do that, and I think 

that that job should be left to staff following whatever other 

precedents have been set in the past for these kinds of public 

comment sessions.

CHAIRMAN MOYNIHAN: Right. Could I then -- I'm sorry, 

Bob. 

MR. JOHNSON: No, I just want a point of clarification 

on the questions. All the questions here go to requests for 

input on personal accounts. Is that correct? 
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DR. JAMES: Except for the last two questions.

MR. BLAHOUS: Not all of them. The questions on the 

first page begin with personal accounts, but some of the 

questions towards the end deal with incentives for workforce 

participation and placing the system on a course of fiscal 

sustainability. 

MR. JOHNSON: Okay. What I'm asking, if someone wanted 

to testify but absolutely, unequivocally opposed personal 

accounts, or if a number of somebody's, we would accept those?

CHAIRMAN MOYNIHAN: Fine. Then fine. Not the whole 

day. 

MR. JOHNSON: Right.

DR. JAMES: Because that person could certainly address 

question number 12 --

MR. JOHNSON: Twelve and thirteen. 

DR. JAMES: -- on fiscal sustainability.

MR. JOHNSON: So we're going to take every idea that's 

within the range of reason. 

MR. BLAHOUS: Absolutely. 

MR. JOHNSON: Okay.

CHAIRMAN MOYNIHAN: Now hold on. Some members of 

Congress might want to testify too. 

MR. JOHNSON: They would be ---.

MR. : Is that a contradiction?

MR. PARSONS: I do think that the point that's being 
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made down at the end of the table, that we will need to -- that 

there will be more people who want to testify than will be 

permitted to by constraints of time. Just because someone 

happens to be for or against a particular position, that 

shouldn't be a gating factor, but I think if we follow Bob's 

suggestion and get a sense of where each of those who wants to 

testify is coming from, we can group them. And you will have a 

range of approaches to a subject matter, and then each of those 

subject matters should be captured, but I wouldn't want anybody 

who's here or who is watching to think that all they need do is 

indicate that they have something to say and that they will have 

an opportunity to say it, because we don't have, unfortunately, 

that kind of time. 

CHAIRMAN MOYNIHAN: Well, then could I -- well, I'm 

sorry, Estelle.

DR. JAMES: Yes, well I just wanted to underscore that 

even if people don't testify orally, we can still take account of 

their written statements, and that's a reason for requesting 

short written statements so in fact they can be read. 

CHAIRMAN MOYNIHAN: Uh-hm. Uh-hm. Mario.

MR. RODRIGUEZ: How much time are we actually talking 

about for this, for the public input? An hour, two hours, three 

hours, four hours? 

MR. BLAHOUS: Well, I think the commission envisioned 

meetings, all-day meetings of a four to six-hour length, but 
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obviously that's up to the commission and the co-chairs. 

MR. PARSONS: We haven't sort of finalized on that yet. 

 A lot of it will depend on how much we have to do, but I could 

see on both coasts having at least a morning session and an 

afternoon session where people come. It's hard to sit for more 

than about three hours without a break and listen, but you do 

that morning and afternoon, morning and afternoon on the other 

coast. Then if we really need to break it down further, we have 

the option that Estelle suggested, which is taking two rooms and 

having four commissioners in each room listen to --. So we've 

got a lot of flexibility around it. 

CHAIRMAN MOYNIHAN: Well, I'm going to suggest then 

that we have agreed that in following just congressional 

patterns, that witnesses will submit in advance in writing their 

statement, their entire statement, and that -- is it agreeable 

that statements be limited to five minutes? 

(Commissioners nod their heads in affirmation)

CHAIRMAN MOYNIHAN: But that the commissioners can then 

ask questions of the witness.

MR. FRENZEL: Those who ask too many questions lose 

their library card. 

CHAIRMAN MOYNIHAN: There you are. There you are. I 

think that feels about right, doesn't it?

MR. FRENZEL: Yes. 

MR. BLAHOUS: May I make one additional observation, 
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Mr. Chairman. The next meeting of the commission is scheduled 

for August 22nd.

CHAIRMAN MOYNIHAN: That's right.

MR. BLAHOUS: The first date of public hearings is 

scheduled for September 6th. It might not be unreasonable that 

the deadline for submissions of ideas could be timed to occur 

just before the August 22nd meeting, so that at the August 22nd 

meeting the commission can have a discussion and make a 

determination as to which submissions should result in the 

opportunity to testify. 

CHAIRMAN MOYNIHAN: Well, that's right. You might find 

there's a huge imbalance or we might learn something from who 

comes forth and says I'd like to be heard. Don't you think, Bob? 

(No audible response)

CHAIRMAN MOYNIHAN: Tom.

DR. SAVING: I think I'm a little concerned that 

individuals who see this list may think it mutually exclusive, 

and in fact any suggestion for reform ought to certainly, as 

we've said, have to deal with the fiscal sustainability of the 

suggestion, and these are -- you would expect anyone who 

suggested private accounts, for example, as the solution would 

have to answer almost every one of these questions. So they are 

not mutually exclusive. You don't want someone to testify about 

number one, but you're really asking someone to testify about 

solutions to this financing problem that we have, and those 
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solutions ought to be sustainable. They certainly can discuss 

only one of these, but they should be encouraged to discuss more 

than one. 

DR. JAMES: Could I --

MR. BLAHOUS: Okay. If nothing else, answer question 

12?

DR. JAMES: Could I have a follow-up reaction to this?

DR. SAVING: Everyone should have to answer question 

12.

DR. JAMES: Could I have a follow-up reaction to this? 

 You know, the more questions we ask them to address, the more we 

have to be concerned about the time constraints. There's a limit 

to what you can meaningfully say in five minutes about any one of 

these questions, and if we ask them to address a whole set of 

questions, I think five minutes becomes unrealistic. So I would 

like us to think through the five-minute concept perhaps a little 

bit further. 

CHAIRMAN MOYNIHAN: I wonder if we could begin 

following congressional procedure. Your oral testimony is five 

minutes. 

DR. JAMES: Uh-hm. 

CHAIRMAN MOYNIHAN: And then you ask the balance of 

your statement be included in the record as if read. The whole 

of the statement will be in the record.

DR. SAVING: Well, that's what I had in mind. 
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MR. FRENZEL: A limit on the written remarks, 

Mr. Chairman?

CHAIRMAN MOYNIHAN: Well, I'm willing to let people 

write as much as they want. Free country.

DR. JAMES: Are you willing to read?

CHAIRMAN MOYNIHAN: I didn't say --

(Laughter, simultaneous conversations)

DR. JAMES: You're a good reader?

MR. PARSONS: I'll take the Fifth on that one.

DR. JAMES: Because you're a speed reader.

MR. FRENZEL: Well, they have to be advised that people 

will read so far.

CHAIRMAN MOYNIHAN: Yes. Don't bury the lead, I think 

is the journalist's signature on these matters. 

MR. PARSONS: May I, Mr. Chairman.

CHAIRMAN MOYNIHAN: Sir.

MR. PARSONS: On the point that Tom was raising, a 

slight variation of it. I do think that the way in which the 

questions are presented in this sheet you handed out sort of give 

it the appearance of weight towards personal accounts, their 

structure and the construct and how they are managed and 

administrated and the rest of it. To use your expression, we 

sort of buried the lead, which is fiscal sustainability and some 

thoughts on that. I might turn these around, and really almost 

all the questions on the first page, one through six, are part of 
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the same question. Just how would you --

CHAIRMAN MOYNIHAN: Yes. Yes. Yes. 

MR. PARSONS: If you think personal accounts makes some 

sense, how would you structure it including size and elections. 

I mean, that's really one question. I think anything we put out 

should give the appearance, because it is the reality of this 

commission, of balance of view, an openness to all thoughts that 

really relate to putting what is currently an unsustainable 

system on a sustainable course, hopefully with a wealth 

generation aspect to it. 

DR. JAMES: Well, following that suggestion, perhaps 

the order should be reversed.

MR. PARSONS: Yes.

CHAIRMAN MOYNIHAN: Does that not appeal to us as a 

proposition?

MR. : Good idea.

CHAIRMAN MOYNIHAN: Sounds right. Chuck, that's agreed 

to. Good thought. And I think consolidating those first six 

questions into one or two.

MR. BLAHOUS: We'll do it.

DR. JAMES: I think it's also perhaps worth having an 

explanatory statement. The reason there are so many questions 

about personal accounts is there are so many detailed aspects 

that would need to be thought about. We thought we could really 

benefit by hearing a variety of opinions -- 
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CHAIRMAN MOYNIHAN: There you go. 

DR. JAMES: -- on these issues.

CHAIRMAN MOYNIHAN: There you go. There you go. Tim.

MR. PENNY: Thank you, Mr. Chairman. As I viewed this, 

we do have three categories that for the first six deal with all 

sorts of particulars related to personal accounts, the next four 

really are safety net questions, the final two are fiscal 

matters. I think it might be best to abbreviate the first six in 

some way, because it -- I don't think it requires quite this many 

questions to kind of get the point out that we're looking for 

input, and I don't want to create the impression that that's the 

bulk of our work here, because there's more work to be done than 

simply defining personal accounts, although it's a very important 

piece and these are important questions. 

I'm only curious as to the final two questions whether 

we want to be more explicit in asking people how they might feel 

about certain options both on the benefit side and the revenue 

side. It's implied, so maybe we don't need to do that and we 

just take what people give us, but I want a reaction to that if 

you would. 

MR. BLAHOUS: Well, my reaction would only be based on 

what I've heard from individual commission members to this point, 

and all of them are here to speak for themselves, but I do know 

that in the drafting of these questions the concern was expressed 

that the commission not indicate in these questions a bias in any 
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particular direction, that we should leave it totally open to the

public to make suggestions. 

MR. PENNY: It's fine. I assumed that it had been 

given some thought by --

CHAIRMAN MOYNIHAN: Yes. I mean anything you suggest 

would be ---.

MR. PENNY: -- others and by the staff, and that's 

satisfactory to me. That's fine. 

CHAIRMAN MOYNIHAN: Very well. Mr. Goss, you have been 

unaccountably subdued today. Is it because you agree with 

everything you've heard or because you're aghast?

(Laughter)

MR. BLAHOUS: Or aghast, as the case may be. 

MR. PARSONS: Handle that pitch. 

MR. GOSS: Hardly aghast, Senator Moynihan. I wasn't 

expecting you to raise this issue and offer me the opportunity to 

just make a couple comments. I guess I would seize the 

opportunity, though, just on a couple of points. That is, first 

of all, with respect to the 2016 and 2038 dates, obviously both 

of these are dates of significant concern, and in reading through 

the commission draft report, now I believe accepted, I think very 

clear distinctions have been made between these dates and very 

effectively in the discussion earlier today by a number of 

members of the commission. They've done a very good job I think 

of making the distinctions. The way that we oftentimes think of 
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the distinctions between these dates is the 2038 date is the date 

which I think many people have said everybody agrees based on the 

projections that there is clearly a Social Security problem at 

that stage of the game. There will not be sufficient tax 

revenues and there will be no remaining Trust Fund assets to be 

able to pay the benefits. The 2016 issue is a little bit 

different. Clearly there's a problem here, but the nature of the 

problem is probably in the broader context of the Federal 

government as a whole. From the narrow point of view of the 

Social Security program and the Social Security trust funds, 

there would be the view that the trust funds are there, as many 

people mentioned. Gwen King, Estelle, I think some others said 

the Trust Fund securities, the Treasury securities are there and 

that they would be redeemed. The issue is, of course, the 

difficulty of redeeming those, and that is a broader budgetary, a 

broader governmental issue, not necessarily specifically a Social 

Security problem, so-called. The only other comment that I guess 

I would make would be with regard to the question of the 

redistribution of benefits.

CHAIRMAN MOYNIHAN: Yes. Yes. 

MR. GOSS: That is that I think some very, very good 

points are made in the report about this. I know there's been 

some discussion, myself with staff members, on this issue. There 

have been a number of academic studies that have addressed the 

redistribution of benefits, and I would just emphasize that the 
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report is very clear on saying that for the retirement aspect of 

the program, there are certainly issues for the current program 

in terms of redistribution. Black Americans, for example, 

because they do have shorter life expectancies in terms of the 

retirement portion of the program therefore have a tendency to 

get less benefit. There are of course some mitigating items, 

like the fact that black Americans do tend to have lower earnings 

levels and therefore, as Olivia mentioned, tend to in the monthly 

level of their benefits tend to have a higher replacement ratio 

relative to the earnings. And also, as I think Gwen mentioned, 

the fact that there are certainly also mitigating features which 

are the survivors' and disability benefits that the current 

system offers. I believe the report even is fairly clear in 

saying that these aspects may at least in part offset some of the 

effects of the life expectancy. 

CHAIRMAN MOYNIHAN: Well, I think you heard, I think it 

was John Cogan who said that it appears that there really is --

in the end, the Social Security benefits are neutral as regards 

on these matters, that there is no redistribution. Didn't you 

say that?

DR. COGAN: I think Olivia mentioned that as well.

CHAIRMAN MOYNIHAN: Olivia mentioned it as well. And 

does that trouble you?

MR. GOSS: I think that as a rough cut that that may 

very well be nearly the case. I think there are two things to 
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keep in mind on that, and again, I think the report was fairly 

clear on this. This concept of neutrality being discussed at 

this point would be on a lifetime benefit basis, not with respect 

to the monthly benefit. Olivia was very clear on that. But on a 

lifetime basis, because some groups that may in fact be getting a 

higher monthly benefit relative to what they put in, if the life 

expectancy is shorter, that that then works in the other 

direction. 

As Olivia also mentioned earlier, I would just want to 

mention that we have sort of stepped up our efforts over at the 

Office of the Actuary at the SSA to try to develop some further 

data and information to augment that which has been developed in 

the academic community, by way of looking at what these real 

differential returns are by race and income status. This is as 

was mentioned I think briefly at the first meeting of the 

commission. 

CHAIRMAN MOYNIHAN: Race, gender and income. 

MR. GOSS: Gender? There are lots of issues on gender, 

and of course, if you look at I think for instance for Hispanic 

Americans, there was a mention, I believe, in the report of how 

much money is paid in by way of contributions versus how much 

money comes out. If you look for instance for women, for females 

in our society, of course, the amount of money that is paid in 

contributions relative to the benefits that comes out is very 

favorable with respect to women. So there are a lot of ways of 
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looking at these redistributive aspects, and I think a large 

number of these are included in the report. 

CHAIRMAN MOYNIHAN: As you come upon or devise further 

ways, you'll keep us informed.

MR. GOSS: Absolutely.

CHAIRMAN MOYNIHAN: And I know I can't say too much how 

grateful we are, not just to the Office of the Actuary, but to 

the Social Security Administration. You've been wonderfully 

responsive. Perhaps you'd tell the Acting Commissioner how much 

we appreciate that. 

MR. GOSS: It would be my pleasure. Thank you, Senator 

Moynihan. 

CHAIRMAN MOYNIHAN: Bob Pozen. 

MR. POZEN: It might be useful just to give the staff a 

little more guidance. It seems like perhaps we should ask them 

to put out a revised question list as soon as practical, and then 

ask people to submit something by August 15th so that they would 

have time to go through the proposed speakers --

CHAIRMAN MOYNIHAN: Ah.

MR. POZEN: -- for the 22nd. 

CHAIRMAN MOYNIHAN: Done. Chuck Blahous.

MR. BLAHOUS: I have it, sir. 

CHAIRMAN MOYNIHAN: Mr. Beard.

MR. BEARD: Why don't you just -- in terms of having 

the public have a chance to express themselves, I think it's very 
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important that the whole thing be open and fair, and early on in 

the discussion people have the opportunity to write anything they 

want and send it to us, which is part of the record, out of which 

some will be allowed to, just because of time constraints, make 

oral comments, but basically the written comments we're all going 

to get them and it's part of reaching out to anybody with a good 

idea, and I think from a fairness viewpoint it's important. 

CHAIRMAN MOYNIHAN: Fair point. Robert Johnson.

MR. JOHNSON: Mr. Chairman, let me suggest something 

which might be heresy in Washington, such as the call of asking 

the public what they might think about this. Is it possible that 

we could retain a very well respected polling agency to ask 

questions of the public about this broad Social Security issue in 

a manner in which while some of it is somewhat complicated but in 

a manner in which they would understand, and at our presentation 

at our first hearing we could have that pollster report on what 

data they gleaned from the public's opinion about how they would 

like us to address Social Security? I don't know where the money 

will come from. I think AOL has a pot of money they set aside 

for these kind of socially beneficial things.

(Laughter)

MR. JOHNSON: But the point is, to me it would be 

really interesting to see how John and Mary Q. Public might feel 

about these issues and how they would expect us to respond to 

them. That would just be a suggestion. 
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CHAIRMAN MOYNIHAN: It's a good suggestion. We are 

going to have a summary of the polling data that does exist. 

John.

DR. COGAN: I was going to say that. It strikes me 

it's a good idea to have some information from polls, but I think 

Olivia suggested that we might be able to get some information 

from work that she's already done --

CHAIRMAN MOYNIHAN: Right. Right.

DR. COGAN: -- collecting and collating polling data. 

MR. : Mario said he had just done some. ---.

CHAIRMAN MOYNIHAN: Mario will.

DR. MITCHELL: There's been a retirement confidence 

survey also that's been fielded a number of times over the years 

by the Employee Benefit Research Institute.

CHAIRMAN MOYNIHAN: Oh, sure. Yes.

DR. MITCHELL: Perhaps you can ask them to do an update 

and a time trend for us. 

CHAIRMAN MOYNIHAN: Will you do that on behalf of the 

commission?

DR. MITCHELL: Sure. 

CHAIRMAN MOYNIHAN: Yes. Yes. Commissioner. 

MS. KING: Senator Moynihan, it's been my experience 

that everyone who's offered an opportunity to testify will come 

forward except the people who are perhaps closest to the program, 

and that is the people at the Social Security Administration.
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CHAIRMAN MOYNIHAN: Oh.

MS. KING: I believe they may have some views on this, 

and I don't really think we're going to get those views unless we 

ask them directly. So I'd really like to invite the Commissioner 

or someone from the Administration to come before us at our next 

gathering, if they indeed have something they would like to share 

with us. 

CHAIRMAN MOYNIHAN: Good idea, but let them make that 

judgment, all right? I think it's something that, wouldn't you 

agree, they may feel a little bit restrained. 

Well, I think we have had a good day. I want to thank 

you for the thought and effort that's gone into it. I think 

Blahous and Brown are going to have a pleasant weekend, but I 

think we're moving along well, don't we all agree?

MR. : Yes, sir.

MR. FRENZEL: Excuse me, Mr. Chairman. We have 

approved the draft as amended by the staff I guess on --

yesterday. Is that the end of it or is there more smoothening 

being done?

CHAIRMAN MOYNIHAN: Oh, there will be more smoothening, 

because we've been talking about it. That's what we went round. 

MR. BLAHOUS: From the co-chairs and the rest of the 

commission we still are ready and able to take additional 

wordsmithing. 
Audio Associates 

301-577-5882 

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CHAIRMAN MOYNIHAN: And we have yet to determine 

whether or not the Frenzel coat of arms can be used on the cover 

of the report. Let's see. No response. Well, we'll negotiate. 

MR. JOHNSON: Motion to adjourn.

CHAIRMAN MOYNIHAN: There's a motion to adjourn. 

(A chorus of seconds)

CHAIRMAN MOYNIHAN: It has been seconded. Those in 

favor will say aye.

(A chorus of ayes)

CHAIRMAN MOYNIHAN: Motion's carried, and we will see 

you in August. 

(Whereupon, the meeting was adjourned at 1:45 p.m.)